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The rise of the digitally-savvy board

The rise of the digitally-savvy board

Our boards are not ready for digital disruption, so how can we bring about positive change?

Whether it is changing company culture, empowering your people, driving better education of the coming generations, keeping abreast of external technology, and investing more in the local startup scene, there are a myriad of ways that Australia can break free of its status as an innovation laggard.

In part 1 and part 2 of our series on innovation in Australia, CIO explored what has caused our digital economy recede, how CIOs can contribute to our rehabilitation, and the role that executive leaders and senior managers have to play in the increasingly digital business environment. Now, in the final part we rest our final gaze on that group which can often make or break a business strategy and empower leaders – the board.

Not ready

“I am convinced that our boards are not ready for this,” says Steven Burdon, professor of strategic management and technology at the University of Technology, Sydney (UTS).

Professor Burden was discussing the Australia-specific challenges of an increasingly digital business environment during a business lunch in Sydney.

“We need to change the boards … the CEOs don’t like it, but the involvement of shareholders in strategy is increasing, and they want change.

“Currently it’s just legal and finance people on boards, and there’s nothing wrong with them, but you also need people who understand the industry, and who increasingly understand technology.”

Luke McCormack, VP and MD of Pegasystems for Asia Pacific, says compliance is too often a key focus of Australian boards, leaving little room for innovative discussion.

“In the last 10 years the main focus of boards has been compliance. Compliance first, innovation somewhere else down the list – and for good reason – but it needs to be a balance and it’s been compliance only,” he says.

“That’s led to a culture where boards feel they can just play catch up with innovation, or leave it all up to a digital officer, but it needs to be a company-wide change.”

More digital representatives

Burdon believes Australian boards need a greater focus on digital and IT, with experts in these fields invited to discuss strategy. Catherine Livingstone, chair of Telstra, is one good example of this approach being successful in the digital world, said Burdon.

“She’s a real tech head, and I’ve seen her trying to transform the Telstra board into something appropriate."

CIO Executive Council member and digital consultant, Karen Scott Davie, is also putting her expertise to good use, shaking up boards and encouraging members to see the world through digital glasses.

“There has to be more technology and digital people on boards. There's actually enough space for two roles whether it’s digital, digital marketing, digital technology, and then the end-to-end technology side,” she tells CIO.

Scott Davie has overseen many positive transformations during her time on boards, in sectors ranging from tourism, telecommunications, education and superannuation.

“With every board that I’ve been on in the last 12 years, I have been the only person who brings digital and technology skill set to the table, and it makes it more challenging when you’re trying to recommend as a board that we innovate with digital transformation or digital marketing,” says Scott Davie.

“Luckily, I’m a good educator and a passionate influencer, I’ve shared many ideas. And while that knowledge sharing is really powerful, it might take six months to implement new ideas, instead of two months, because you’re spending that extra time educating people on the potential benefits of digital transformation before you’ve got to sell them on the ideas.”

Openness to new ideas, and an awareness of competitive threats from the emerging external business community are critical, on top of consider reputational risk for business.

“The whole business is at risk, and you could turn a whole industry on his head with an effective digital transformation of one business leading the charge.” she says.

“The whole business is at risk, and you could turn a whole industry on his head with an effective digital transformation of one business leading the charge.” she says.

Flipping the model

During her time as the digital representative on the board of Tourism Tasmania, Scott Davie helped to change the way the company marketed and communicated to its stakeholders and external suppliers, flipping the model from an 80 per cent print and 20 per cent digital to 80 per cent digital, 20 per cent print.

Scott Davie helped support the marketing director’s lead to change the way the tourism business marketed and communicated to its stakeholders and external suppliers, flipping the model from a majority print media, to majority digital over print advertising spend.

Initially the board was reluctant to invest further in targeted social campaigns as they had less understanding and awareness of the digital tools as effective business tools. Slowly through education, awareness and small targeted test cases, the digital marketing campaigns proved more effective, measurable and effective, says Scott Davie.

Not only did the board members start to adopt the new technology the more they learned, but with these changes the business was able to reach its target of a million visitors per annum, raising the target to 1.5 million visitors, following 14 per cent growth in tourists – a capacity reached by no other Australian state, despite having considerably higher budgets.

“Now that I’ve finished my term on that board they've brought in the CEO of Spotify, which is fantastic. It shows me they’re thinking digital and realising how important it is to do things in a way that engages the customers,” says Scott Davie.

“Innovative thinking and digital transformation has to be driven from the board, not just from the CEOs. They need to push some new ideas, risk taking and different thinking as to how they can improve the business, particularly to be customer facing, but the transformation must deliver all the way through the back end business processes.

Lack of governance

Gavin Heaton, digital consultant and founder of the Disruptor’s Handbook, cautions that not every ‘digital expert’ is as genuine as Scott Davie, and introducing some universal governance in the area would ensure real progress is made.

“When people come along and talk about digital it's easy to be impressed by that. People think, wow, these guys know what they’re talking about and they're saying all the words I keep reading,” says Heaton.

“But there’s a lack of governance in that process, where boards try to get an understanding about the digital landscape, who knows what they’re doing, and how they go about it.

“We can end up with bad advice for solving digital problems, and seeing budgets being wasted, then needing other teams to come in to mop up the mess, so that’s a real waste of resources.”

Eyes on managers

The onus is not just on boards of course, as a company’s culture and productivity cannot solely rely on one group of people meeting intermittently. The development of product, service and general business processes is handled at all levels of the business.

“Boards can challenge the business and help it grow. But the true innovation comes from the managerial level – as it should,” says Fergus Watts, digital consultant and CEO of Bastion Group.

“The real innovation happens when the board empowers their managerial team to take the lead and drive change.

“It’s then the job of the managers within the business that really should be looking at how they get the best result from their people and how they set up the organisation for long term success.”

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Tags leadershipdigital strategyinnovationdigital consultantboardsexecutive teamdigital disruptionboardroom discussionsboard decisionsbusiness transformation

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